What Are Non-Participating Insurance Plans?

What Is a Non-Participating Life Insurance Policy?

What Are the Features and Benefits of a Non-Participating Insurance Plan?

How a Non-Participating Insurance Policy Is Different from Participating Insurance?

Before discussing the differences, let us first briefly know what participating insurance policies are.

Simply put, participating insurance policyholders get profit shares if the insurance company manages surplus revenue. It is designed to provide a dual benefit of insurance cover and corpus growth. In addition to the guaranteed life coverage, participating plan provides non-guaranteed benefits in the form of bonuses.

Now, let’s discuss the significant differences between Participating and Non-Participating plans:

Basis Non-Participating Insurance Plan Participating Insurance Plan
Meaning As a policyholder, you do not participate in the insurance company’s investment profits. Hence the name Non-Participating or Non- Par As a policyholder, you participate in the insurance company’s investment profits and receive their profit portion as bonus. Hence the name Participating or Par
Premiums Charged Insurance providers charge lower premiums from non-participating policy seekers Premiums are comparatively higher for participating policy
Returns Promised Registered beneficiaries receive assured death benefits in case the policyholder meets demise within the policy term.

In certain cases, the insurer may offer maturity benefits to the insured person at the end of the plan’s tenure
Participating insurance buyers enjoy periodic bonus payments apart from maturity benefits, if the insurance company makes profits. Besides, just like non-participating plans the beneficiaries are entitled to death benefits
Long-Term Costs Long-term costs are more as there are no additional bonuses attached to a non-participating plan Long-term costs are less as you get yearly bonuses that appreciates as per cash value policy
Risk factor These plans come with little to no risk and the beneficiaries get assured death benefits Minor risk is there as a part of your money gets invested in different financial securities, like bonds.

Par or Non-Par Insurance Plan: Which One is Ideal for You?

FAQs About Non-Participating Insurance Plan

Do Non-Participating Insurance Plans Guarantee Maturity Payouts? up-arrow

It is subjective to the policies set by the insurer. For example, non-participating plans only guarantee death benefits if the life insured expires within the policy term.

Is it Worth Buying a Non-Participating Life Insurance? up-arrow

Yes, it is highly recommended for all to own a non-participating life insurance as these plans assure guaranteed death benefits at an affordable premium. 

What if I'm Unable to Pay my Premiums During the Premium Payment Term? up-arrow

There can be several results in such cases: 

i) Lapse

In case you are unable to pay your premium by the due date and even after the grace period, your policy lapses if it has not acquired a paid-up value.

When a policy comes in a paid-up value, it continues with reduced paid-up benefits.

There is also a reinstatement period after policy lapse wherein the policy can be restarted upon payment of all due premiums and additional charge, if any. 

ii) Surrender

A regular pay policy acquires a surrender value after two years of premium payment. Post this, it can be surrendered. However, a single premium policy acquires a surrender value within the first year of the policy itself. 

iii) Partial Withdrawal

Some plans provide the option of partial withdrawal after which the policy continues with reduced benefits. 

What is the Grace Period in Non-Par Plans? up-arrow

Grace period in non-par plans, as in other life insurance plans, is a 30-day extension period in case you miss the policy premium date and 15 days for other frequencies like monthly, quarterly and half yearly payments.